Public Sector Pensions

[RedEvo]

Hi,

Does anyone have any accurate figures for a typical public sector pension? Perhaps someone working for a local council earning around the UK average wage.

To make sense of the current debate on this subject I'd like to see some numbers in particular the amount paid in and the potential amount received on retirement, assuming an average life span.

I have a feeling the difference between the amount paid in and the benefit received might be interesting but I'd like some facts.

cheers

d

 

[captaincloser]

You will be lucky to get any response from public sector employees or ex employees on here.

Their pensions are a subject that no UK government seems able or willing to confront.

 

[Curious]

Aren't a lot of them final salary based as well, not just money paid in like us mere mortals?

Or am I incorrect?

 

[We Do PPI Claims]

iv heard things but never seen my sister works for the council and has since she was 16, i think before any changes she could retire 45-50 on a full pension. I might try and get a look at her documents

 

[InPrintImaging]

I know someone working in a university that was being moved from final salary to career average and wasn't happy about it because it was a cut. This might be unpopular to some, but, I didn't have that much sympathy for them actually. Why should they have a better pension than everyone else? If final salary scheme is unsustainable for the private sector (which it is) why should everyone else fund it for the public sector? At the end of the day, a job is a job. We all have to work hard, and private sector work is some of the most challenging around. Nor was I particularly convinced about his salary arguments. His starting salary out of university was around £10k more than mine (although that gap dropped over time). Overall, when I was still in employment rather than self employment, the overall earnings were not that different (comparing university researcher to accountant here so there might be differences with other professions).

 

[Geoff T]

Public sector pensions used to be a perk of the job... same with the govt... has it changed in the civil service too?

(Bearing in mind that govt - local or national - are an "overhead", not a "profit centre" to the country's economy?)

 

[RedEvo]

I do believe you should get out what you put in but perhaps there's an argument to counter this. I just haven't heard it yet.

d

 

Some info here.

http://www.bbc.co.uk/news/business-11466273

Earl

 

[Jeff FV]

Happy to give you details as to how a teacher's pension works:

Contributions:

Teacher pays 6.4% of their salary as a pension contribution, the employer pays 14.1%

Benefits:

The pension can be drawn from age 60 (it can be drawn from 55, but is actuarially reduced in this case, at quite punitive rates, to keep things simple we'll not look at this scenario.) For each year that contributions have been made, the pensioner recieves 1/80 x their final salary, plus a one off lump sum of (number years of contributions/80) x final salary.

So, as an example, a teacher who retires, earning £30,000 in their final year of service, and who has taught for 28 years would recieve:

28/80 x 30,000 = £10,500 pa pension, plus a one off lump sum of £10,500

A teacher earning £30,000, with 38 years of service (contributions) i.e. started teaching on qualification at age 22 and retires at 60 would recieve

38/30,000 = £14,250 pa + a lump sum of £10,500

The above is based on those who joined the scheme before January 2007 (I think)

Jeff

 

So, as an example, a teacher who retires, earning £30,000 in their final year of service, and who has taught for 28 years would recieve:

28/80 x 30,000 = £10,500 pa pension, plus a one off lump sum of £10,500

A teacher earning £30,000, with 38 years of service (contributions) i.e. started teaching on qualification at age 22 and retires at 60 would recieve

38/30,000 = £14,250 pa + a lump sum of £10,500

The above is based on those who joined the scheme before January 2007 (I think)

Jeff

Is that on top of the state pension Jeff.?

Earl

 

[Jeff FV]

Is that on top of the state pension Jeff.?

Earl

Yes - teachers will receive the basic state pension in addition to the above.

 

Yes - teachers will receive the basic state pension in addition to the above.

400 quid a week and only contributing 6.4% of there salary.

Blimey no wonder every bugger wants to work for the state.

"According to the report, public service schemes paid out £32bn in 2008-09, which was about two-thirds of the cost of the basic state pension."

Earl

 

[estwig]

Happy to give you details as to how a teacher's pension works:

Contributions:

Teacher pays 6.4% of their salary as a pension contribution, the employer pays 14.1%

Benefits:

The pension can be drawn from age 60 (it can be drawn from 55, but is actuarially reduced in this case, at quite punitive rates, to keep things simple we'll not look at this scenario.) For each year that contributions have been made, the pensioner recieves 1/80 x their final salary, plus a one off lump sum of (number years of contributions/80) x final salary.

So, as an example, a teacher who retires, earning £30,000 in their final year of service, and who has taught for 28 years would recieve:

28/80 x 30,000 = £10,500 pa pension, plus a one off lump sum of £10,500

A teacher earning £30,000, with 38 years of service (contributions) i.e. started teaching on qualification at age 22 and retires at 60 would recieve

38/30,000 = £14,250 pa + a lump sum of £10,500

The above is based on those who joined the scheme before January 2007 (I think)

Jeff

Thanks for that Jeff, very interesting. The way the press have been carrying on I thought all you teachers, was running off with the Crown jewels!!

It's a nice pension, but it hardly affords a champaign lifestyle.

 

[Matt1959]

and apparently this is what the lady from UNISON says about some public sector workers.....

"Many public sector workers do very physically demanding jobs - expecting paramedics to carry patients into an ambulance at 66, 67 or even 68 is a danger to themselves and patients, and the same is true for nurses, midwives, bin men, road cleaners and many more"

The comments re. paramedics, nurses and midwives I can understand - bin men and road cleaners?????

why should the private sector have to work on but not the public sector:|

​

 

[estwig]

why should the private sector have to work on but not the public sector:|

But they don't have to work on, we all have choices.

 

[Matt1959]

But they don't have to work on, we all have choices.

I bit confused here - anyone can stop working at any time if they have the money in the bank by way of savings or pensions and that applies to public and private. If you are skint and can't afford to retire until pension time then that applies to both sectors as well:|

 

why should the private sector have to work on but not the public sector:|

​

Cause they don't get wacking great pensions like the public sector.

And they have to work there nuts off to pay those pensions.

400 notes a week is quite comfortable if the house is paid for and the kids have buggered off.

Earl

 

[Jeff FV]

Cause they don't get wacking great pensions like the public sector.

And they have to work there nuts off to pay those pensions.

400 notes a week is quite comfortable if the house is paid for and the kids have buggered off.

Earl

Not sure where you are getting the figure of £400 a week from?

If you have a teacher who's contributed for their whole working life, they'll get a pension of circa £14,250 pa, which, divided by 52, gives £274 a week.

I can only assume that you are then adding on the state benefit of £102 a week (for which they've paid NI contributions, in addition to their pension contributions) which takes the total to £376 a week.

Yes, its a good pension, but not in the bankers bonus league that some would have you believe.

 

Quote:

Accountants PriceWaterhouse Coopers have estimated that private sector workers would need to contribute about 37% of their salary to their pension pot over their working lifetime to match the retirement income paid to a public sector worker on an equivalent wage.

Earl

 

[Geoff T]

But they don't have to work on, we all have choices.

sure... if starvation is a choice?

 

[estwig]

sure... if starvation is a choice?

A bit extreme, we have a welfare system.

 

[estwig]

I bit confused here - anyone can stop working at any time if they have the money in the bank by way of savings or pensions and that applies to public and private. If you are skint and can't afford to retire until pension time then that applies to both sectors as well:|

I'm a bit confused too, what I was trying to get at is we do all have choices.

We can choose when to retire.
We can choose how much money we need to live on.
We can choose where we live
What we drive.
What we eat
What car, if any, we drive.

If someone says they can't affords to retire, what they are really saying is, I would like to have more money before retiring, this is their choice and they have made it.

I don't wear this b*ll*cks about people having to work until they drop, they don't, they have a choice.

 

I'm a bit confused too, what I was trying to get at is we do all have choices.

We can choose when to retire.
We can choose how much money we need to live on.
We can choose where we live
What we drive.
What we eat
What car, if any, we drive.

If someone says they can't affords to retire, what they are really saying is, I would like to have more money before retiring, this is their choice and they have made it.

I don't wear this b*ll*cks about people having to work until they drop, they don't, they have a choice.

We don't have a choice about how much we pay for ,petrol,mortgages,food,clothes and many utilities.

Hence judging how much one needs to retire is no easy matter.

Earl

 

[Matt1959]

If someone says they can't affords to retire, what they are really saying is, I would like to have more money before retiring, this is their choice and they have made it.

.

taking this one on its own - many people go through life living day to day so life dictates to them as does what happens when they either choose to retire or have to retire. I suppose we're back to the argument that people choose their lifestyle - for sure if you live in a one bed flat in a cheap town, ride a bike, have no holidays and eat beans on toast etc etc etc then possibly just possibly you'll have enough dosh at 60 to retire when you want but tis not much of a life is it:| is this what you meant by choice??

I agree that oppourtunities are there for all but not everyone has the abilities/ skills etc to take advantage of them or we'd all be millionaires

 

[estwig]

We don't have a choice about how much we pay for ,petrol,mortgages,food,clothes and many utilities.

Hence judging how much one needs to retire is no easy matter.

Earl

No it's not easy.

To take your examples, we can choose where to shop and what to eat. We choose how much we pay for petrol by the mode of transport we choose to use. The size and location of your house affect the size of your mortgage, again a choice.

 

[estwig]

taking this one on its own - many people go through life living day to day so life dictates to them as does what happens when they either choose to retire or have to retire. I suppose we're back to the argument that people choose their lifestyle - for sure if you live in a one bed flat in a cheap town, ride a bike, have no holidays and eat beans on toast etc etc etc then possibly just possibly you'll have enough dosh at 60 to retire when you want but tis not much of a life is it:| is this what you meant by choice??

I agree that oppourtunities are there for all but not everyone has the abilities/ skills etc to take advantage of them or we'd all be millionaires

Yes those are by your own definition choices. Yes life is full of opportunities, not everyone chooses to be a millionaire even if the opportunity is afforded to them.

This isn't aimed at you matt, or anyone else here. I have never understood people who are clearly unhappy with their lot, but are unwilling to do anything about it.

 

No it's not easy.

To take your examples, we can choose where to shop and what to eat. We choose how much we pay for petrol by the mode of transport we choose to use. The size and location of your house affect the size of your mortgage, again a choice.

But as individuals we can not control inflation or guess what it might be 10 years on.

http://swanlowpark.co.uk/rpiannual.jsp;jsessionid=4271059E1CD0519E3729D964861F8EBD

Earl

 

[Podge]

Yes those are by your own definition choices. Yes life is full of opportunities, not everyone chooses to be a millionaire even if the opportunity is afforded to them.

This isn't aimed at you matt, or anyone else here. I have never understood people who are clearly unhappy with their lot, but are unwilling to do anything about it.

Has it occurred that there will be many people who are not happy with their lot but are unable rather than unwilling to do anything about it.

 

[RedEvo]

Great debate and thanks for the info and links.

In summary it seems public sector workers get out more than they put in and the difference is funded by the private sector, who themselves can't afford the level of contributions required to match the public sector payments.

Yes?

d

 

Some feelings about pensions on the beeb.

http://www.bbc.co.uk/news/business-11938045

50% management fees.?

Earl

 

[deniser]

In summary it seems public sector workers get out more than they put in and the difference is funded by the private sector, who themselves can't afford the level of contributions required to match the public sector payments.

Yes AND will have to carry on working for longer to fund a) their own retirement and b) the pensions of the public sector workers who retired a long time before they did.

The other issue which really riles me is that we were all told in the 80's to put money aside for our private pensions, which I did, and then I lost it in the Equitable Life fiasco. So we lost our own pensions and have to pay for someone elses.

 

[deniser]

Actually, sorry, reading my post, it sounds as though I begrudge the public sector their pensions. I don't, I just think that everyone should have the right to a pension in similar terms regardless of whom they work for and that non public sector workers should not be left at the mercy of the banks.

 

[Jeff FV]

Great debate and thanks for the info and links.

In summary it seems public sector workers get out more than they put in and the difference is funded by the private sector, who themselves can't afford the level of contributions required to match the public sector payments.

Yes?

d

That's true, but the Public Sector is paid for by the Private Sector, whether in the form of wages today, or pensions tomorrow. Traditionally, the Gov. has 'cooked' the books by paying less now in salaries and defering the bill for pensions for later. Now, however, that policy is coming back to bite them.

One of two things will happen in the medium to long term:

The quality of public services will fall, or the cost the taxpayer will go up as wages have to rise to help recruitment & retention.

I can only really speak about education, but I do see a huge shortgae of teachers in 5 - 10 years time as the current 50 somethings retire and the current 40 somethings decide that they aren't going to carry on for another 15 - 20 years, just for the pension. So teachers salaries will have to increase to recruit/retain staff, and the so the private sector will have to pay more.

There isn't an easy solution, but please don't think that raising public sector contributions and make them retire later will solve all the problems - it won't. It'll just shift them elsewhere.

I just hope that when I'm old & frail, those that care for me will be professional, dedicated and therefore suitably remunerated and not someone who can't get any other job and is on the minimum wage (a bit like those who worked in the adult care home recently featured on Panorama).

 

[Jeff FV]

Actually, sorry, reading my post, it sounds as though I begrudge the public sector their pensions. I don't, I just think that everyone should have the right to a pension in similar terms regardless of whom they work for and that non public sector workers should not be left at the mercy of the banks.

I wrote my post above ^^ whilst you must have been writing yours, and I'm really glad I've now read this as its the first time I've seen someone not expecting a public sector pension write something like this.

I think that there is a real danger that we are in a race to the bottom with regards to pensions and instead of the private sector saying the public sector shouldn't be getting their pensions, the private sector should be saying, hang on, we want pensions like that too.

 

[RadiusBPO]

I'm nieve, I don't understand the concept of retirement. It seems from the outside that people work through their "prime" until they are old and then sit about doing nothing or cutting the grass. How boring.

 

[Podge]

I'm nieve, I don't understand the concept of retirement. It seems from the outside that people work through their "prime" until they are old and then sit about doing nothing or cutting the grass. How boring.

Not so, if you have been stood at a machine for 50 years earning a pittance.

 

[Matt1959]

yes in an ideal world private pensions will be increased to match public but it aint gonna happen as we cant even afford public pensions on there own so the idea is irrelevant really:|.

The notion that underfunded public sector pensions should be topped up the by the private sector seems ludicrous to me.......

Again, if you used to fantastic benefits and theres a threat to reduce or take them away, you're going to be annoyed its human nature, but expecting someone else to pay for them is a bit rich:redface:

Ps I still don't get keiths (estwig) point - its theory and it dont happen in reality....

 

Not so, if you have been stood at a machine for 50 years earning a pittance.

Quite in this modern world very few people are faced with having to work for a living.

Earl

 

[RadiusBPO]

Not so, if you have been stood at a machine for 50 years earning a pittance.

I worked in a factory for a few years, a small part of that included production work standing at a machine for 12 hours putting strawberries into pots, or packing desserts into boxes and then onto a pallet.. There was plenty of scope to move to better paid roles, or move companies and move "up". There's no need to for someone to limit themselves to a production job unless it's their choice. Even so why replace a boring repetitive existence with another one which just involves TV and complaining about the local mayor.

If people want a retirement where they have a lot of money they should pay for it themselves, the gov or their company shouldn't have to contribute IMO.

 

[Podge]

I worked in a factory for a few years, a small part of that included production work standing at a machine for 12 hours putting strawberries into pots, or packing desserts into boxes and then onto a pallet.. There was plenty of scope to move to better paid roles, or move companies and move "up". There's no need to for someone to limit themselves to a production job unless it's their choice. Even so why replace a boring repetitive existence with another one which just involves TV and complaining about the local mayor.

If people want a retirement where they have a lot of money they should pay for it themselves, the gov or their company shouldn't have to contribute IMO.

If there was scope for EVERYBODY to leave the shitty jobs behind and move up who would do the shitty jobs that you rely on?

Just because you have the brains/acumen/opportunities/drive/commitment or whatever it takes to make you successful in what you do doesn't mean everybody has.
If they did the country would fall apart as nobody would be prepared to do the low paid work that's needed to keep the countries infrastructure working.

I'm not knocking your success, just the notion you have that if you can do it so can everybody else.